What is your Screen-Time of Social media activity ?
Is your Social media activity
Controlled by yourself?
Is your Social media activity
Controlled by Social media itself?
?
?
Class Result (in %)
?
What is Meta Platforms?
Meta Platforms, Inc., is an American multinational technology conglomerate
based in Menlo Park, California, doing business as Meta and formerly known
as Facebook, Inc., and TheFacebook, Inc.
The company is the parent organization of Facebook, Instagram,
and WhatsApp, among other subsidiaries.
Meta products and services include Facebook, Messenger, Facebook Watch,
and Facebook Portal.
What is Meta Platforms?
It has also acquired Oculus, Giphy, Mapillary, Kustomer, Presize and has a 9.99%
stake in Jio Platforms.
In 2021, the company generated 97.5% of its revenue from the sale of advertisement
placements to marketers.
In 2021, Meta's (formerly Facebook Inc) revenue amounted to roughly 117 billion
US dollars, up from around 86 billion U.S. dollars in the previous fiscal year.
Meta Platforms, Inc. has 3.6 billion monthly active users
Goals, Mission and Value Statements
sfs
Code of ethics and Code od Conduct
Keep people safe and protect privacy—we are committed to
protecting our communities from harm.
The Issue: Ethics & Social Responsibility
Manipulative Algorithm
Facebook is keeping track of your personal online activity.
User privacy and data protection - Cambridge Analytica
Scandal
Posting conspiracy theories – Qanon conspiracy theory
Unfair Exceptions to its false news
Fake News & Hate Speech
Manipulative Algorithm
The algorithm treats reactions such as “angry,”
“love,” “sad,” and “wow” as five times more valuable
than traditional “likes” on the social media platform.
one of its goals is to keep people on the platform, so
that they see more ads.
Like, Comment and Share
Facebook’s ‘Dangerous’ Algorithms
Facebook tracking your personal online activity
Facebook keeps track of your online activity, even after you’ve
closed out of the app.
Whether you’re using Google Maps, Safari, Instagram or
playing a game on your phone. Facebook may be taking note of
your activity.
online activities generates data.
Businesses that you’re looking at will share that data with
Facebook.
Facebook uses these data to target certain ads.
User privacy & data protection - Cambridge Analytica Scandal
Harvesting personal data of millions of people’s Facebook profile
without their consent and using it for political advertising
purposes.
Cambridge Analytica harvested information from over 87
million Facebook users through an external app in 2015.
Trump's campaign hired Cambridge Analytica in June 2016 to
help target ads using voter data gathered from millions of adults in
the US.
Destabilizing democracy.
Using the platform to manipulate political decisions.
OFF-Facebook Activity?
Should Facebook be allowed
to track your activity?
Posting conspiracy theories – Qanon conspiracy theory
In October 2017, an anonymous user named
“Q
Clearance
Patriot”
began
posting
conspiracy theories
In 2020, QAnon supporters flooded social
media with false information about Covid-19,
the Black Lives Matter protests and the
presidential election
Unfair Exceptions to its false news
Treating news outlets differently based on political slant.
A study of user behavior on Facebook results that company’s
algorithms fuel the spread of misinformation over more trustworthy
sources.
Facebook whistleblower Frances Haugen
What is the most principle of Byron’s 10
principles has been violated by Facebook?
Integrity
Veracity
Human Dignity
Common Good
Psychological and Mental Health Issues
Lack of Concentration
Lack of Creativity
Isolation.
Fear of missing out (FOMO)
Depression and anxiety
Cyberbullying
Mental effects of Social Media
Data on Facebook users as of March 2022
2.91 billion monthly active users
2.91 billion users equals 36.8% of Earth’s 7.9 billion people
Approximately, 110 million users of age 13-17 years
Poor
performance GRI Aspects:
Human Rights
Non-discrimination
Security Practices
Human Rights Grievance Mechanisms
Society
Public Policy
Compliance
Grievance Mechanisms for impacts
Product Responsibility
Customer Health and Safety
Customer privacy
Of the four approaches to social responsibility,
where would you rank Facebook?
MGT 501 Group Paper
This case does differ from the RSJ in the News case somewhat. First, it is a paper, not a presentation. Second, it is
an assessment of an overall firm, and not one particular issue facing a firm. While it does not affect your score,
sustainability themes will be especially encouraged.
I’ve presented the keys to an effective paper through a rubric on the following page. As is always the case in my
graded written work, the most important thing is a highly transparent and scholarly application of course material
in processing, analyzing, and making recommendations about the firm you choose. Demonstrate to me how much
of the course material you have mastered, and do this in a way that is obvious and unmistakable. But do not
rehash, recite, or define. Instead, always apply.
Areas to integrate into your paper:
• Firm’s mission, vision, and corporate governance and their relevance to course themes
• Codes of ethics and conduct, how well do these conform with standards and are they effective in practice?
• Assessment of Byron’s 10 principles and how well (or not) they are in evidence at the firm
• Assessment of leadership ethics and corporate culture
• Analysis of key stakeholder concerns and pressures, ideally informed at least in part from typical concerns
and pressures raised in Savitz’ text
• Assessment of the firm with respect to the two CSR frameworks presented in class
• CSR practices generally and how well they map to best practices (or not)
• Assessment of the firm with respect to existing sustainability practices, how well they conform to best
practices as well
• Assessment of the firm’s emerging and newer CSR & sustainability initiatives and their conformance and
application of Savitz’ ideas and prescriptions
• Recommendations for improvement going forward
Report length should be somewhere in 12-17 page range double-spaced. Longer reports are acceptable but should
at least be well-edited. Remember that your goal here is two-fold. One is to analyze/make recommendations for
the firm, the other is to demonstrate to me how much you have learned from this class. Obviously, the two goals
are closely related but don’t lose sight of either in pursuing the other. Use a referencing/citation method as
appropriate; I am not a stickler for this but it must be reasonable and APA is always a good choice.
Paper rubric
Topic
Paper provides appropriate and well-justified analysis of firm with appropriate breadth
and coverage
Paper makes appropriate, insightful, specific recommendations building from analysis.
Key arguments and points are also well-justified
Paper draws from class concepts in a way that is transparent and demonstrates mastery
of course readings, lectures, etc.
Paper follows the general format and style appropriate for paper, is well written with
solid grammar, composition, and style
TOTAL
Comments:
Points
earned
/20
/20
/40
/20
/100
++ Excellent, + Competitive, 0 OK, - deficient, -- absent
Mission, Vision, Gov.
Codes of ethics and
conduct, effective?
Byron’s 10 and
evidence
Leader ethics and
corporate culture
Key stakeholder
concerns and
pressures (Savitz)
2 CSR frameworks
CSR generally and v.
best practices
SUS generally and v.
best practices
Newer initiatives &
Savitz appl.
Recommendations
TOT
Anal/Just
Recs
Course Appl
Writing
TOT
•
MGT 501
Responsibility, Sustainability,
Justice
11: Sustainability: Triple Bottom Line (3BL)
Dr. Robert C. Giambatista, PhD
1
Agenda
• Population clock math
• Questions about remaining work?
• Tonight
o RSJ Presentation: Nestle
o Begin this module
• Next week
o Conclude module, class
o Peer evaluations
2
Overview of this module
• Triple Bottom Line: What is it?
o General concepts, high-level practices
o Examples of firms
• General & supply chain
• Managing the 3BL: A Systemic Approach
o
o
o
o
Genesis in MBO and Control Systems
Step I: Identifying baselines
Step II: Developing Initiatives
Step III: Manage the Process
3
3BL
Typical Measures
• Savitz: An attempt to capture the essence of sustainability by
measuring the impact of an organization’s activities on the world
• People, Planet, Profits
Economic
Environmental
Social
Sales, profits, ROI
Pollutants Emitted
Health & Safety record
Taxes paid
Carbon Footprint
Community impacts
Monetary Flows
Recycling, reuse
Human rights; privacy
Jobs Created
Water & Energy Use
Product responsibility
Supplier Relations
Product impacts
Employee Relations
Total
Total
Total
4
GRI Overview (zoom in next slide)
5
GRI Environmental Detail
6
Savitz: Corporate Accountability in the Age of Sustainability
• This can also help identify the foci of
3BL/Sustainability efforts
o “What can we do to…”
1950s:
Make money
Provide
Philanthropy
1970s:
Make money
Provide Philanthropy
Protect environment
Safeguard products
2010s:
Make money
Provide Philanthropy
Protect environment
Safeguard products
Promote diversity
Improve communities
Protect workers
Prevent child labor
Foster public health
Ensure human rights
Alleviate poverty
Provide technology
Protect privacy
Oppose corrupt regimes
Patrol supply chain
Engage stakeholders
Measure & report
Continuously improve
7
7
Savitz: The Age of Sustainability
Factors driving the trend (summarized from ch.3)
Beyond physical/natural environment
Stakeholder Proximity & Influence
Empowerment:
Freedom & democracy empowers individuals who begin
to question status quo
Empowered employees, customers, investors who
question
Activism/empowered stakeholders & “voting with feet”
Networked world:
More news gets out, and more quickly
Activists form/build networks more
effectively/efficiently
Interdependence:
Socially conscious world:
More concern over stakeholders, justice, environment, etc.
Corporate power , governmental power
In many cases, firms are the only entity with the power and
skills to do anything
8
Best Practices
Selected Examples
What are firms doing?
9
Let’s start with
• One example practice: Cap and trade…
• And one fact: Solar energy
o solar panel costs were 60% lower in the second quarter (Q2) of 2013
than they were in early 2011.
o Update: 2015 another 15% or so
o
o
o
http://cleantechnica.com/2013/09/19/cost-solar-power-60-lower-early-2011us/#5xZgh0ReKQCSRyIw.99
http://costofsolar.com/cost-of-solar-panels-10-charts-tell-you-everything/
https://blogs.scientificamerican.com/plugged-in/the-price-of-solar-is-declining-to-unprecedented-lows/
• Before getting into general concepts
• In Phila., solar installation pays back in 14 yrs
o Many cities are even better paybacks (in years):
• Portland, OR 1 yr, Seattle, WA 4 yrs, Boston 3 yrs, DC 2 yrs, NY 6 yrs
o
http://news.energysage.com/how-much-does-the-average-solar-panel-installation-cost-in-the-u-s/
10
Cap and Trade concept
• A governing body (government, internal
corporate governance, etc.) sets rules for
GHG emissions
• A market is established with a cap on
allowable emissions and a price per standard
unit of emission
o Those under cap can sell the differential
o Those over can buy them
• Allows for market processes
• Allows for stable, gradual change
shutting down polluting plants
• Creates incentives for improvement
• Cap can be lowered
• Most importantly:
vs.
o Concept can be used to commodify
anything
11
Cap and Trade Success Stories
• 1980s: Depletion of ozone layer linked to emissions
• 1987: President Reagan signs Montreal Protocol
o Cap and trade as one provision
• 2006: UN declares protocol is working
• 1990: Present GHW Bush signs Clean Air Act
o Cap and trade to reduce, among others, sulfur emissions contributing
to acid rain
o Passes Senate 89-10, House 401-25
o Widely acclaimed as success by EPA, industry, economists
12
Ceres awards
• Ceres: non-profit focused on sustainable business
o Helped found the GRI, with another non-profit and the UN
• Cited many practices
o I will organize them into 2 areas, loosely defined
o Administrative
o Operations & Other
• Purpose
o To identify some best practices
o To reflect on how 3rd party recognition/honors help firms
13
Best Practices: Administrative
14
Administrative: More
15
Admin: More
16
Operations & Other
17
Ops: More
18
Ops: More
19
Sustainable Supply Chains
Thinking outside the box, er, firm
20
What is a supply chain?
• A supply chain considers, usually from the perspective of a firm, the
entire scope of activities from raw materials to end consumers.
o Many parties (aka stakeholders) are outside the firm’s employ.
• Supply Chain Management is the integrated management of this
nexus of activities and entities
o Input side activities sometimes called “upstream”
o Output activities “downstream”
Figural representations
As center of hub
As part
of a complex
network
As link in a chain
Sustainable supply chain management (SSCM)
• Reducing material, monetary, and environmental waste is one
theme
• General efficiencies is another
o However, emphasis is on stakeholder fairness and justice instead of
mere cost-cutting
• Upstream and downstream relationships
o Accountability, ensuring fair treatment, environmental impacts, etc.
• Broad and narrow SCM definitions
o Legacy of SCM is Operations Management, Logistics, etc.
o Now considers many areas such as Marketing
• Ethical marketing is in SSCM purview, e.g.
Social Standards for Suppliers
• Source:
o
Kagnicioglu, Deniz and C. Hakan
Kagnicioglu (2007), “Descriptive
Analysis of Social Standards for
Suppliers in Top 100 Fortune Global
500 Companies,” Journal of American
Academy of Business, Cambridge, 11
(March), 330-337.
• Method:
o Content analysis of codes
of conduct reported on
Web sites (n = 79)
• 10 no CoC
• 11 don’t include suppliers
• Most frequently included
factors (see next):
• Companies monitoring their
suppliers (84%)
• Other observations &
conclusions
o Tech sector ahead of others
o Awareness of CSR is high and
extended to suppliers
o Europe & US ahead of Asia
somewhat
% of labor standards mentioned in sample
5
8
21
Discrimination
8
Health
Force lbr
Child
Freedom
11
19
Wages
Hours
Security
14
14
Wilhelm
• Lee Scott, CEO Walmart:
o Reduction of waste & non-renewable energy in chain
o Engagement with suppliers, just 1 example:
• Unilever concentration of detergent saves water, plastic, cardboard, shelf space,
shipping/storage
• AND: educates consumers, shows envir. benefit without having to change behavior.
• LEAN manufacturing
o A production practice that considers the expenditure of resources for any
goal other than the creation of value for the end customer to be wasteful,
and thus a target for elimination. Working from the perspective of the
customer who consumes a product or service, "value" is defined as any
action or process that a customer would be willing to pay for.
o “Start with the end in mind”
• What will customer pay for. Eliminate everything else you can.
• Not just internal to firms but within and across links in SC
Assessment of suppliers
• Walmart scorecard
o http://www.walmartsustainabilityhub.com
• HP
o Code of conduct (for suppliers)
o Periodic audits
• Supplier Relationships
o Employee engagement, training, sharing of best practices
• One challenge in learning is that these assessments are usually
confidential
o Another clue that they are highly value-adding
• Apple (open up code of conduct for suppliers document)
Walmart Sustainability Hub
•
•
•
•
To focus our efforts on the most important areas, we use various tools to gain greater visibility
into the world’s vast network of product supply chains. Chief among them is the Sustainability
Index, which was developed in collaboration with suppliers, leading NGOs and the scientists at
TSC. The Index provides a snapshot of the social and environmental practices and outcomes in
a broad array of products and supply chains.
The Sustainability Index gathers and analyzes information across a product’s life cycle—from
sourcing, manufacturing and transporting, to selling, customer usage and end of use. TSC
research first identifies the materially significant environmental and social issues—or “hot
spots”—across the product life cycle. At the same time, “improvement opportunities” are
identified to address those hotspots. The supply chain hotspots and improvement
opportunities are then summarized in a category sustainability profile. Next, key performance
indicators (KPIs) are developed in the form of survey questions that are used to measure
sustainability performance for a particular product category. Suppliers then respond to the
surveys for the specific product categories they supply, each covering up to 15 issues that TSC
has deemed critical. The surveys paint a picture of the sustainability challenges down to the
category level for all kinds of items, from tomatoes to toys. We use the data from the surveys to
identify key social and environmental hotspots and to set an agenda as we work with our
suppliers to drive continuous improvement. We also use it to identify opportunities for special
attention, such as fertilizer optimization or improved animal welfare, to help drive more
substantial change quickly.
Finally, the survey data is integrated into decision-making tools throughout the business. The
use of the Sustainability Index also sets the expectation that Walmart isn’t looking for change at
the margins with a few niche products. We’re trying to raise the bar for all items we stock.
2000+ suppliers completing 5300+ surveys
28
Dole: Costa Rican supply
• More rail, less truck
• Reduction of fossil-fuel based agri inputs
• Updating refrigerated container fleet
o Improved energy efficiency
o Note: Many firms with aging facilities/infrastructure can use
sustainability concerns to get projects “over the hump”
McDonald’s: Let’s surf a bit and talk about what we find
• McDonald’s approach
o http://www.aboutmcdonalds.com/mcd/sustainability/signature_programs/best_pr
actices/best-of-sustainable-supply.html
o http://www.aboutmcdonalds.com/mcd/sustainability/sustainability_CR_reports.ht
ml
o http://www.aboutmcdonalds.com/content/dam/AboutMcDonalds/2.0/pdfs/2014_b
est_of_sustainable_supply.pdf
•
Look at category winners.
• Thoughts?
• Yes, but skeptics?
o The greenwashing charge
o Perhaps, but remember networked age/interdepedence
o Putting this out there on net puts you “on the hook” publicly
(commitment)
o What’s the alternative? No progress at all?
31
Some Specific Supply Practices
•
•
Reduced Use of Petroleum-Based Substances
Sustainable Wood
o Home Depot: Vendor certification by Forest Stewardship Council
•
Storage/Inventory
o Good inventory/logistics have been “known” for decades (EOQ, Just-in-Time, etc.), but
improvements can still be made
• Bonus: Easy to justify cost
•
Packaging
o Reduce, Reuse/Recycle, Redesign (Biodegradable)
•
Transportation/Distribution
o Fuller trucks (better packing)
o Packing pallets on 2 levels – more trips/day
• One benefit: No sleeping berths needed, improves fuel efficiency
o Optimization of weight/capacity to reduce truck loads
•
Routing
o UPS minimal left turns http://www.wired.com/2007/12/no-left-turn-so/
• Modify GPS/Navigation
•
Sourcing
o More local sourcing, simpler sourcing networks
Better Uses for Waste
• Andersen (windows)
o Wood waste from manuf → composite → windows &
doors
• 50% ROI!!!
• Ben & Jerry’s
o Ice cream waste goes to farm pigs
• Starbucks
o Grounds given away for garden use
• Product take backs
o Electronics, e.g.
o All or pieces can be recycled
More
Chunky
Monkey,
Please!
Interview with Senge
• Sustainability issues are often supply chain issues. How do you
effect change across a supply chain?
o First, you focus on the nature of the relationships. In most supply chains,
90% of them are still transactional. If I’m a big manufacturer or retailer, I
pressure my upstream suppliers to get their costs down. There’s very little
trust and very little ability to innovate together. That must change, and it is
starting to.
o Second, you learn to work with NGOs and other nonbusiness entities.
They’ll give you access to expertise that you can’t grow fast internally.
Water is a classic example. A few years ago, Coca-Cola decided to cut the
water used to make a liter of Coke from more than three liters to 2.5 liters.
But it was overlooking the 200-plus liters it took to grow the sugar that
went into that Coke. The company found that out because it partnered with
the World Wildlife Fund, which knew how to analyze the water footprint of
the value chain. Coca-Cola now knows the difference between dripirrigated sugarcane and flood-irrigated sugarcane.
Supply Chain Partnering
• Three types of relationships
o Competitive: Usually cost/price based
o Compromising: Try to solve problems, some competitive negotiating,
establish some relationships
o Collaborative: Win-win
• Costs and benefits of each approach
Themes
•
•
•
•
Not a comprehensive list of practices
Idea is to stimulate creativity & possibility
Piggy back off of good supply chain practices generally
Expand on efficiency into area of social issues
o (labor, etc.)
• Interdependence
o Example: Foxconn affects Apple
• Supply chain view as supplement/complement to firm-level view
Best Practices: A Mindset
• TED Talks
https://www.ted.com/talks/ray_anderson_on_the_business_logic_of_sust
ainability#t-924558
https://www.ted.com/talks/leyla_acaroglu_paper_beats_plastic_how_to_r
ethink_environmental_folklore
44
Sustainability Initiatives &
Programs:
A Methodology
Savitz as a framework
45
Characterizing Savitz Approach
1. Establish a baseline
1. Self-assessment (chapter 7)
2. Identify immediate and “sweet spot” opportunities
1. Turn crises into opportunities (chapter 8)
2. The sweet spot (chapter 9)
3. Pursue minimization, then optimization (chapter 9)
4. Implement strategy (chapter 10)
5. Manage the process & people
1. Managing stakeholders (chapters 11,12)
2. Managing culture (chapter 14)
6. Measuring & reporting progress (chapter 13)
46
Step I. Baseline
47
Identify Baseline
• First need to know what we are going to track
o Examples: Carbon emissions, Pollutants, Energy use, etc.
• Chicken and egg challenge
o Need baseline before pursuing initiatives
o Need initiatives before determining metrics, etc.
• Therefore
o Think of this phase as iterative
o Identify some obvious:
• Metrics firms are reporting
• Sustainability sweet spot opportunities
• Benchmarking best practices - imperatives/opportunities
• To facilitate understanding, we’re going to talk about some
common/best practices first
48
1) Self-assessment
• Goal: Identify where we stand with respect to sustainability
o Who are we? Identity/values/climate
•
•
•
•
Existing internal documentation
Those of competitors
How stakeholders view you
Public sources
o What do we do? Social & environmental impact plus business model
• Are products and services harmful?
• Secondary impacts, side effects
o How do we do it? Like above but more broadly on employees, supply
chain, communities, etc.
• Chemicals, pollutants, human/labor rights, animal concerns, stakeholder
relationships
49
Learning More
•
•
•
•
•
GreenBiz
Global Reporting Initiative (GRI)
World Business Council for Sustainable Development
ISO 14000
Cooperation among competitors
o Can be especially helpful for “Tragedy of the Commons” situations like
overfishing
• Poke around the internet
o Triple Bottom Line tool (will focus on this next week)
• http://www.tbltool.org/files/tbl_tool_users_guide.pdf
50
Detailed resources
• GRI guidelines
o https://www.globalreporting.org/resourcelibrary/GRIG4-Part2Implementation-Manual.pdf
• Start around p. 86
• Triple Bottom Line toolkit user’s guide
o http://www.tbltool.org/files/tbl_tool_users_guide.pdf
51
The GRI
• Global Reporting Initiative
o More than 80% of 250 largest corps in world now on board
o Leading benchmark for measuring, monitoring and reporting corporate
sustainability efforts
• Primarily a reporting methodology
o Principles:
• Stakeholder inclusiveness, sustainability context, materiality, completeness,
balance, comparability, accuracy, timeliness, clarity, and reliability
o Domains
• 3BL: Economic, Environmental, and Social
• Each domain has aspects and micro-aspects
o Environmental → Materials, energy, water, biodiversity, emission,
effluent/wast, products/services, compliance, transport, overall, supplier
enviro assessment, enviro grievance mechanisms
o Energy → consumption w/in org, outside org, intensity, reduction of
consumption, reductions in energy requirements of products and
services
52
GRI: Snapshot of coverage
53
GRI Example
54
Another
55
GRI emphases
• Relevant social & environmental concepts
• Clear and complete definitions
• Clear reporting methodology
o How to measure, what to do and not to do
• Provides basis for:
o External reporting
o Internal management
• MBO & SMART analogies
56
GRI Pros and Cons
• + Rigor, comprehensiveness, legitimacy, input to
sustainability initiative, becoming a standard
among >80% of largest corporations, creation of
data for various purposes of value to
management
• - Costly (at least up front), not enough to actually
engage in improvement from what I can see
o Except year-to-year trend inspection
o Provides the data to keep score
• You provide the initiatives & programs
• Hence I also show the TBL toolkit
57
Step 2: Identify & Exploit
the Sweet Spot
58
A Starting Point:
The Sustainable Sweet Spot
• As Savitz states, sustainability is hard, but
o Savitz also states its easy (sweet spot)
o Step 1:
• Identify the “low hanging fruit” or “heavy half” (80/20) solution
• Ask, where are the ‘no-brainer’ opportunities for sustainability?
• Which societal interests are easily and demonstrably justified as serving
business’ interests?
Business
Interests
Sweet
Spot
Societal
Interests
Sweet Spot:
License to Operate
Efficiency Gains
Business Growth
Innovation
Inspiration
59
2) Sweet Spot: Crises Into
Opportunities
• Pepsi, Coca-Cola, and Kerala (India)
o Both firms drawing water from local aquifers
o 2002 drought → Protests
o Pepsi: initial response
• Hydrogeologists proved water drawn from separate source
• Public didn’t care
o Pepsi: sustainable response
• Improve, expand community wells
• Aggressive water management procedures
o Increase recharge of aquifer
o Coke’s response
o Local response to responses
• Coke plant shut down by gov’t
• Activists also pressured to shut down Pepsi, and:
o Local inhabitants stopped the movement to shut Pepsi
down
60
Road Map & Examples
• Start small and “sweet”
o Pick “small wins”, easy wins, obvious wins
• Look at customer needs
o Volvo & safety vs. GM
• Work with supply chains (W-M, McD’s examples)
• Work with existing skill set
o What are your core competencies? Start here.
• Foresee future challenges & stay ahead of the game
o Toyota Prius leading curve on hybrids vs. Ford, GM
• Empower individuals (see examples slides)
• Nike
o From villain to hero (sort of) in 10-15 years
o The Teflon effect
• Reputation & attribution of trouble
61
Nike: transformation
• Child labor: 6c/hr (1996)
o CEO Phil Knight combative
• Reform
o 16 yrs old, education provided, NGO monitoring
o Code of supplier conduct, internal monitoring, common monitoring for
entire industry
o Named suppliers, allowing for open checking
o Helped create Higg index of sustainability
• Since
o Controversies have occurred but have been weathered
o Nike is now routinely cited as a responsible and sustainable firm
62
Step 3: Minimization, Then
Optimization
From Good to Great
Going beyond incremental fixes and re-inventing the firm
63
Minimize & Optimize
• Minimize – being less bad. Optimize – being more good.
Business Function
Minimize
Optimize
Worker health and
safety
Reduce workplace
accidents
Create a healthy and happy
workforce
Environmental
Protection
Clean up hazardous
wastes
Use waste to restore
environment or create new
products
Energy use
Reduce the use of fossil
fuels
Shift energy generation to
solar
Product Packaging
Reduce the use of needless Produce packaging that
packaging
biodegrades and contains
seeds/fertilizer
Customer service
Respond more quickly to
complaints
Work with complainers to
create new and better
products
64
Min & Opt mindset
• Minimize mindset is generally incremental
• Optimize usually requires more creativity and radical thinking
• TED talk
o Helps give an appreciation for this mindset
o
https://www.ted.com/talks/leyla_acaroglu_paper_beats_plastic_how_to_rethink_environmental_folklore
o General thoughts about this video?
65
Step 4: Implementation
• Management by objectives
o
o
o
o
What are our goals? SMART!!!
What will we do to obtain our goals (strategies and tactics)?
How will we measure our progress towards these goals?
What processes will we build in to review this progress and revisit
goals, strategies, measurement, etc.?
66
Key Performance Indicators:
Hypothetical Example
•
•
From MBO, what will be our metrics, how will we gather data on them,
what will be the specific end goals and mileposts?
Goal:
o Eliminate all child labor in supply chain in 5 years
•
Metrics: Quantify whatever possible
o 1st person (us) and 3rd person (Fair Labor Association, e.g.) audits
o Metric 1
• Percentage of suppliers/total supply that uses ANY child labor
o Metric 2
• Total % of supply labor that is taken by child labor
o Key definitions
• Child labor defined as any worker under the age of 15, etc.
•
Mileposts (example)
o Year 1: Implement all procedures and identify baseline, communicate future
with suppliers, look for alternative suppliers
o Year 2: All suppliers must reduce child labor by 25%
o Year 3: All suppliers must reduce by 50% or terminate business
o Year 4: All suppliers must no longer use child labor at all or terminate
business
o Year 5: Assessment, ensure goal attainment, enact contingency plans,
identify new goals, etc.
67
Savitz
Dealing with
Implementation Realities
68
Internal issues
• Book goes into creating a sustainability staff
o Cross-cutting, virtual
• And HR implications:
o Same basic arguments as module 5 on best practices in ethics
69
Managing Stakeholders: Influence Grids (fig 11.3-4 p207-9)
• Identify all stakeholders and key issues important to them
• Identify the level of support stakeholders have for your initiatives
• Identify, from the issues/importances, how much influence stakeholders
have
• Create a 2*2 grid with 4 cells:
o Empower: High support, low influence – empower these stakeholders to
turn support into influence
o Monitor: Low on both – not an imminent concern, but stay abreast of
possible changes
o Partner: High on both – Find opportunities to work together for mutual gain
o Engage: Low support, high influence – these are traditional “adversaries” –
as they say in negotiation, bring them to your side of the table, engage in
dialog, find some areas of agreement, try to influence them towards
moderation
• Hershey example
70
Cultural change (applies to any
change)
•
•
•
•
CEO/Top Management buy in
Champions
High profile x-functional teams/task forces
Environmental scanning / benchmarking
o Proximal or adaptable success stories
• Small wins → momentum
• Formal and informal incentives
o May need to change reward systems
• Not just pay but status, “who gets ahead”, etc.
• Metrics
o Habit and institutionalization
• Savitz (next slide)
Creating a Culture of Sustainability
Savitz, Chapter 14
• Sustainability vision or mission
o Vision: Optimal desired long-term future state / compass
o Alzheimer's Association: "Our Vision is a world without Alzheimer's
disease."
o Mission: Present/near term (1-3yrs) state/purpose: What we do,
for whom, and how
o Tesla (2017) – class discussion on these
• Vision: “to create the most compelling car company of the 21st century by
driving the world’s transition to electric vehicles.”
• Mission pre-2016: “to accelerate the world’s transition to sustainable
transport.”
• Mission post-2016: “to accelerate the world’s transition to sustainable
energy.”
• Honest self-appraisal
• CEO involvement and agenda setting
• Long-term thinking
72
Best Practices: A Mindset
• TED Talks
o https://www.ted.com/talks/ray_anderson_on_the_business_logic_of_su
stainability#t-924558
o https://www.ted.com/talks/leyla_acaroglu_paper_beats_plastic_how_to
_rethink_environmental_folklore
73
Other tips and practices
• Make reasonable estimates – don’t oversell, do reasonable
projections/probabilities based on historical/industry data
• Do sensitivity analysis (10% crisis risk vs. 1% crisis risk, 1%
increased customers vs. 5% increased customers, 2% vs 10%
increase in turnover
• Find breakeven points & payback
o At what risk/revenue/cost level does the project break even
o If the project breaks even, do it – it’s not subject to profit maximization
logic
• Also: Project is probably “better” than this analysis because of unforeseen
impacts, rising expectations, and because net neutral finance impact + social
good = net gain
Final quotes
• Byron, p.214
o Do we create our ethical future with a vision of how we want the world
to be, or does ethics simply evolve naturally over time and human
experience? Whatever the nature of the evolution, I would hope that
ethical principles … of courage and competence become part of
ethical discourse. I am convinced that the principled person with the
principled vision can find his or her way through the ‘murkiness’ into a
more ethical future. It is an impossible journey only for those whose
destination is themselves.”
• RFK
Final Story: Jose & Hamdi
76
TED Talks
• Choi: Getting investors to champion social values & sustainability
o
https://www.ted.com/talks/audrey_choi_how_to_make_a_profit_while_making_a_difference
• Anderson: Business logic of sustainability
o
•
Mohr: The tradeoffs of building green (+: Short)
o
o
•
Life cycle assessment is a great way of thinking. Very good high-level view of sustainable design
https://www.ted.com/talks/leyla_acaroglu_paper_beats_plastic_how_to_rethink_environmental_folklore?language=en
James Hansen: Why I must speak out about climate change
o
•
Goes into details of home building and how to think broadly about energy & sustainabiity in design and structure (embodied energy)
https://www.ted.com/talks/catherine_mohr_builds_green?language=en
Acarogle: Rethinking environmental folklore (common perceptions)
o
o
•
https://www.ted.com/talks/ray_anderson_on_the_business_logic_of_sustainability
http://www.ted.com/talks/james_hansen_why_i_must_speak_out_about_climate_change?language=en
Tesla: Can follow up Acarogle with this one
o
https://www.youtube.com/watch?v=ES1gRzEGALM
What are some sources of sustainabile efficiences associated with Tesla
77
MGT 501
Responsibility, Sustainability,
Justice
10: Sustainability: The Challenge
Dr. Robert C. Giambatista, PhD
1
Tonight’s agenda
• RSJ: H&M
• Start the population clock
o https://www.census.gov/popclock/
• End with population clock
• Also, NYT:
• https://www.nytimes.com/2016/11/24/science/global-warming-coastal-real-estate.html
o SE Florida: 10 floods/yr now, 240 by 2045
o Sales (2015-16): +2.6% nationally, -7.6% in flood zones
o Flood Insurance: $7000/yr vs. 200/yr in less flooded areas
• Some houses will not be sold because of this
o Median home price last 10 yrs:
• Flooding risk = -4.4%, no risk = +29.7%
2
Sustainability Module agenda
• Tonight: The Problem
o What are some general problems in sustainability affecting business?
• Next: 3BL & Best Practices
o What are some metrics, benchmarks, exemplary actions that firms are actually engaging in?
o What are supply chains and what are sustainability issues there?
• Summary: Business case
o What does research say about sustainabilty and business performance?
o General comments on Sustainability & course
3
Sustainability definitions
• Savitz:
o An unsustainable action is one that harms the interests of one or more stakeholders
• Eventually, this harm will reach a limit where it is unacceptable
o By extension, sustainability would be consistently engaging in actions that avoid harming interests of
stakeholders
• Note that Savitz uses restrictive definitions of both ethics and social responsibility, but an
expansive definition of sustainability
o In actuality, very few actions are one or two without being all 3.
Ethics
Soc Resp
Sustain
7
Other sustainability definitions
• Investopedia (has note but do not see formal definition)
• Wikipedia has both: Corporate Sustainability is a business approach that creates long-term
consumer and employee value by not only creating a "green" strategy aimed towards the
natural environment, but taking into consideration every dimension of how a business
operates in the social, cultural, and economic environment. Their general sustainability
term is more of an environmental sciences approach.
• Sustainablemeasures.com
o There may be as many definitions of sustainability and sustainable development as there are groups trying
to define it. All the definitions have to do with:
• Living within the limits
• Understanding the interconnections among economy, society, and environment
• Equitable distribution of resources and opportunities
8
Savitz: The Age of Sustainability
Factors (beyond physical/natural environment):
Stakeholder Proximity & Influence
Note: I think some of these from ch3 are nearredundant so I’m re-organizing them:
Empowerment:
Freedom & democracy empowers individuals who begin to
question status quo
Empowered employees, customers, investors who question
Activism/empowered stakeholders & “voting with feet”
Networked world:
More news gets out, and more quickly
Activists form/build networks more effectively/efficiently
Interdependence:
Socially conscious world:
More concern over stakeholders, justice, environment, etc.
Corporate power , governmental power
In many cases, firms are the only entity with the power and
skills to do anything
An imperiled world (the focus tonight)
9
Basic problems in sustainability
• Overpopulation
• Interdependence
• Shrinking world: inability to escape impacts
o Externalities: privatized gains, socialized losses
o Internet, social media, etc.
o More humans affected by environmental/social problems
• Non-linear math, abstract vs. here & now
o Some problems, like global warming & overpopulation do not follow linear processes, much
more dangerous as a result
• Public attitudes
o Credibility of actors
o Polarized public, politicization
o Younger generation
• Overly narrow view of profit (ST, only investor oriented)
o The business usage of the word derives from the older and more general verb meaning
• To gain an advantage or benefit, or to be beneficial to
11
An example of an externality
• Of smoking costs, personal and social responsibility
• Q: How much would you have to pay per pack (tax) for the health impact of cigarettes
to be offset on a per pack basis
• It’s actually an easy problem to solve; a few years back I went onto some
governmental websites and solved it.
o Health cost of smoking / packs of cigarettes smoked
• Smoking costs = 6.5% of health expenditures, which were $1.9T in 2004 ($123B). That’s
$410/person/yr, $1070/household/yr.
• Average smoker smokes 16 cigs a day (NIH survey), about 1/5 of adults smoke (ditto), 1/5 of approx. 223M adults is
44.6M*16/20*365 = 13B packs of cigs a year.
• Average health cost per pack of cigarettes = 123/13=$9.50/pack
• Does not include second-hand smoke and other unknown impacts
• Cigarettes are taxed at $1.01 per pack federally, $1.60 for PA in 2014
• $2.61 per pack overall
• Who pays? Who should?
• Who benefits from such a meager response?
12
Non-linear math, complex/abstract logic
• All important to understand
o Positive feedback loops: vicious cycles
• Greenhouse effect and deforestation
• Hansen: Higher CO2→higher temps→greater release of CO2 naturally from sea water→uh oh
• Overfishing reduces competitors and predators to jellyfish
o Jellyfish eat fish eggs and poison or swarm fish
• Reducing competition to jellyfish
o Critical mass or tipping point
• A system reaches a point where its dynamic & impact changes fundamentally
o Overpopulation
o Arctic Sea Ice depletion
o Exponentiation
• Same principle as finance
• Impact equation
13
World Population
OMG
OMG2
Today
14
Overpopulation
• The rule of 70
o Global population increased by 29% 1990-2009
• From 1990, doubling would be expected in ≈ 47 yrs.
• Carrying Capacity: how many humans can the earth support?
o Difficult to estimate but a recent and generous estimate is 10B.
o Pimentel & Giampetro: Sustainable US population should be 200M.
• By 2006, humanity was using 40% more than what earth can regenerate (Ecological
Footprint Atlas)
15
Problems associated with overpopulation
• Inadequate fresh water
• Depletion of resources, esp. fossil fuels
• Increased pollutants
o
•
•
•
•
Prosperity decreases this problem
Deforestation
Atmospheric (GW)
Arable land loss
Species extinction
o Food chain problems
• Child mortality
• Likelihood of epi- & pandemics
•
•
•
•
•
•
Starvation, malnutrition
Poverty/inflation
Life expectancy
Unhygienic living
Crime
Conflict over scarce
resources
• More restrictive laws
• How many of these does
business contribute to?
16
Oil depletion
• Still finding new reserves, but:
o More expensive & intrusive
o Temptation to put off the problem
o Increases CO2 emissions → global warming
17
Frack U(SA)
18
I’ll take Geography for $200, Alex
• Trebek: This peculiar well-lit area is the only one that doesn’t
correspond with a heavily-populated metro area.
19
Co2 Emissions: where do they come from?
Our wasteline looks like our waistline.
20
CO2 emissions: how are they trending?
21
CO2 emissions: Why does it matter?
22
Other problems
• Deforestation: http://www.youtube.com/watch?v=hllU9NEcJyg
• Species extinction
o If you don’t care about them, care about this:
• Poverty & Hunger
23
Poverty & War
24
Water problems
Economic water scarcity means not only is there little
physical water present, but people can’t afford to obtain sufficient amounts.
2nd source: sitemaker.umich.edu
25
Global Warming
The Biggest Problem
and therefore
The Greatest Business Opportunity
Of the 21st century
26
Global Warming Presentation Overview
• Basic Evidence for Warming
o Arguments against warming
• Evidence for Human Causes
o Arguments against Human Causes
• “Controversy” in society, media & leadership
• Epistemology of the Human Causes argument
o e·pis·te·mol·o·gy: the theory of knowledge, especially with regard to its methods, validity, and scope. Epistemology is
the investigation of what distinguishes justified belief from opinion.
• Key
o GW=Global Warming
o AGW=Anthropogenic (Human-Caused) Global Warming
27
Global Warming: Basic Evidence
28
Global Warming: Basic Evidence 2
• 347 consecutive months (Jan/2014) above pre-industrial average
o Odds of no warming are 1 in 2^347 or
• 287000000000000000000000000000000000000000000000000000000000000000000000000000
000000000000000000000000000 to 1 against.
o 2016 Postscript: 26 more, so 2^347*2^26 or 2^373
o 2018 Postscript: 50 more, so 2^397
• Terms
o GW = Global Warming
o AGW = Anthropogenic (Human Caused) Global Warming
• Time article
o http://time.com/3656646/2014-hottest-year/
• Postscript: 2015 broke the record.
• Post-postscript: 2016 broke that record.
o 2018 Update: EACH of the 5 hottest years have occurred since 2010.
• Probability = 5!/127! = 3.98e-212 that’s .000 (211 leading zeroes) before the 3.98.
• If the odds of getting hit by a car tomorrow are 1 in a 1,000,000, this would be similar to the odds
of getting hit by a car 35 consecutive days.
o 2022 update: The warmest 7 years since recordkeeping began (c. 1880) have all been since
2015.
29
Common Anti-GW and Anti-AGW Claims
• Anti-GW claim – no global warming
o See previous evidence – clearly false
• Anti-AGW claim
o “There is no consensus on GW or its basis in human activity”
• We’ll address that shortly
o It’s a conspiracy/hoax
• In terms of funding per output, the reverse is actually true
o
o
http://www.theguardian.com/environment/2013/dec/20/conservative-groups-1bn-against-climate-change
http://www.huffingtonpost.com/2015/04/07/science-funding_n_7020382.html
• For funding per output to be equivalent, there would have be $2.2T in advocacy money spent
o Journals won’t publish anti-AGW papers
• Truth: Academic journals love counterintuitive findings.* It is true that they don’t love poorly
designed/conducted research.
o *Man bites dog > Dog bites man
30
The “no warming in last 17 years” argument
•
http://www.washingtonpost.com/news/energy-environment/wp/2015/03/24/ted-cruz-says-satellite-data-show-the-globe-isnt-warming-this-satellite-scientist-feelsotherwise/?tid=pm_business_pop_b
• Gist of argument
o Last 17 years show no warming trend
• Problems with argument
o Compares an anomalous data point to a long term trend
• At least one of the following statements is true:
o The argument is mathematically illiterate
o The argument is disingenuous
• Illusion disappears looking at 5-year moving average
o Red line
o 1998 an exceptionally hot El Nino
•
http://planetsave.com/2012/01/05/global-warming-trend-vs-global-warming-variation-cute-dog-video/
31
Related argument: we’re cooling now
•
•
•
•
Similar illogic as the 17-year argument
Ignores known cyclical cooling effect of La Nina
2013-2014 not La Nina years
2017 was the hottest non-El Nino year in history
32
Digression into time series analysis
• Y=T+C+S+I
o Trend, cyclical, seasonal, irregular
• Cyclical (sun spot cycle, El Nino, etc.)
o Source of some cooling myths
• Seasonal (weather) variation
o Source of sea ice myth
• Irregular (1998 etc.)
o Seeing non-existent patterns
o http://www.skepticalscience.com/graphics/ArcticEscalator500.gif
• Trend
o Natural T,C,S, and I are largely known
o Current trend is HUGE relative to natural forces
• But completely in line with trends in CO2 emissions
o A known greenhouse gas
• Couldn’t there be a HUGE unknown natural trend?
o How science works: An important point (later slide)
33
More evidence
• Exxon’s history and strategy
o
http://www.huffingtonpost.com/entry/oil-cover-up-climate_us_570e98bbe4b0ffa5937df6ce
• 2015: Hottest year on record
o https://www.ncdc.noaa.gov/sotc/global/201513
• New concerns that sea level rise happening faster than originally predicted
o
o
o
http://www.climatecentral.org/news/study-reveals-acceleration-of-sea-level-rise-20055
http://www.nytimes.com/2016/02/23/science/sea-level-rise-global-warming-climate-change.html?_r=0
http://www.climatecentral.org/news/us-with-10-feet-of-sea-level-rise-17428
o What most don’t realize about scientific method is its inherent conservatism
• To minimize likelihood of false positives (Type I errors)
35
The Case for AGW
AGW = Human-caused global warming
36
Why is this important
• If global warming is not caused by people:
o We either can’t control it, or maybe shouldn’t control it
• If global warming is caused by people:
o Human activity is accelerating such that the problem will only get worse unless we control it
• And controlling it:
o
o
o
o
Requires industry to self-regulate much more than they have shown they are willing/capable of
Therefore, government regulation is probably needed, AND:
We might need to cede some sovereignty to an international organization/treaty
Also, a radical effort to change could impact the economy
• Finally, there is tremendous skepticism from some on AGW
37
AGW (Human Causes): Let’s ask scientists
• Approach 1
o Count all those who
UNEQUIVOCALLY support
AGW versus everyone else.
o Result:
• 97%-3%
• Comment
o Approach is very
conservative as it lumps as
many other positions as
possible into 3%
38
Approach 2
• Count the articles that EXPLICITLY reject AGW as a proportion of all
articles
o Approach is less conservative than Approach 1
o Result: 2257 to 1 (articles), 9136 authors to 1
•
•
•
http://www.popsci.com/article/science/infographic-scientists-who-doubt-human-caused-climate-change
This is not a debate. This is not general consensus. This is UNANIMITY.
Also, regarding moral integrity, note that most neutral and pro-AGW sources cite the more conservative
finding on the previous slide, even though this one is just as valid
39
Gap between experts and US public
• 2008 Gallup poll cited earlier
o Note how, as respondents are
more proximal, more informed,
more expert in climatology, survey
response “Yes” to AGW increases
• Why is public so skeptical?
o Media
o Political polarization and
ideological faultlines
40
The False Equivalence Problem
• How the media handles the Global Warming so-called
“controversy”
o Nerdy science guy against spiffy PR guy
• Implication: Truth must be halfway in between positions
Ice core samples,
meteorological
observation,
historical
records…
Did you see how
much it snowed
this winter? Check
and mate!
• https://www.youtube.com/watch?v=cjuGCJJUGsg
41
The leadership problem
• Which guy knows more about global warming, the Columbia University
climate professor on the left, or the snowball-throwing senator on the
right?
• Which one currently chairs the Environment and Public Works committee?
o What is really going on here? One possibility:
o https://www.youtube.com/watch?v=gZEdDMQZaCU
42
Perspective on theory and science
• The Scientific Method
o Scientists develop theory1, which is basically a statement based on logic or previous evidence and
experience, about how X causes Y
o A theory must be testable/falsifiable
o Studies test theories
• Evidence from a study confirms or refutes the theory
o Over time
• Studies, evidence, findings accumulate
• Theory either becomes accepted, or
o A new theory emerges that purports to better explain logic/evidence
• Q: How do we decide whether evidence confirms or refutes a theoretical X→Y claim?
1 A big part of the problem is that the word “theory” means something different to laypeople than academics
43
Validity of scientific causal claims
• Hypothesis: Humans are causing global warming.
o Challenge 1: Prove the association
• Global warming must exist
• There must be a human cause that correlates with the warming trend (CO2, methane & other greenhouse
emissions)
o Challenge 2: Temporal precedence
• Must show that increased emissions occur before global warming (subsequent slide)
o Challenge 3: Rule out other explanations
• All other explanations known to date could not have caused this much warming this quickly
• All unknown explanations would have to be of such magnitude it is not plausible that they would still be unknown
• AGW critics have yet to put forth an alternative explanation that meets these challenges, successfully refutes
AGW, or explains the totality of data effectively
44
Longer trend
We know about past climates because of evidence left in tree rings, layers of ice in glaciers, ocean
sediments, coral reefs, and layers of sedimentary rocks. For example, bubbles of air in glacial ice
trap tiny samples of Earth’s atmosphere, giving scientists a history of greenhouse gases that
stretches back more than 800,000 years. The chemical make-up of the ice provides clues to the
average global temperature.
45
Man-made vs. natural causes
46
Source: Skeptical Science
• Multiple studies, compare equivalent colors to find individual
results
• Natural forces, overall, are neutral to even slightly cooling
o Thus, human caused can be >100%
47
1 & 2) Association, Temporal precedence
Hmm, there might be a connection here…
48
3) Alternative Explanations: which one fits?
No known natural cause of global climate change is consistent with the
data, but human causes correlate nearly perfectly.
49
3) Alternative explanations: why none proposed?
• Basic principle of science and knowledge
o Larger & easier to measure/detect effects/phenomena are easier to detect/understand than smaller ones
• Why we discovered gravity before black holes
• Example: Which radio station will be easier to pick up on your radio?
o Any natural cause for warming of this magnitude1 would have been EASILY identified by now.
Strong signal
Weak signal
1:
Magnitude means size and rapidity of effect
50
Summation & next steps
• Global Warming exists
• Global Warming is largely caused by human activity
• Question
o What should we do about it?
o Costs, benefits, risks, ethics come into play here
o Type I error
• Global warming does not exist and we spend $$$ on it
• Inefficient use of $$$ but get large gains from sustainability
• Problem with argument: False premise (it does exist and is caused by humans)
o Lesser Type 1 error is possible (human cause is 75%, not 100% of warming, e.g.)
o Type II error
• Global warming does exist and we avoid action
• Loss of land, resources, global conflict, economic depression, loss of life
o Q isn’t really do nothing vs. action but rather how prudent and what type/magnitude of action should we take
o Also question of governance in light of global problem
51
Big Business Working on Climate
Science – Jeff Nesbit
• “Nearly every large multinational corporation (even big oil companies such as Exxon Mobil,
Shell, Chevron, and BP) now accepts climate change science on its face. The only holdouts
are coal companies that stand to lose most in a global energy transformation in the next 20
years, and private companies like Koch Industries that rely on the fossil fuel economy.”
o Source: http://www.usnews.com/news/blogs/at-the-edge/2014/08/05/wal-mart-ibm-and-coke-amongcompanies-addressing-climate-change
o Jeff Nesbit was the National Science Foundation’s director of legislative and public affairs in the Bush and
Obama administrations; former Vice President Dan Quayle’s communications director
52
Future projections
Even if greenhouse gas concentrations stabilized today, the planet would continue to
warm by about 0.6°C over the next century.
Most experts are concerned that at 4o C, ecosystems may begin to completely collapse.
No way to know because change is so dramatic & rapid compared to historical record.
53
Understanding non-linear math: IPAT
• Sustainability impact conceptual equation:
o Impact = Population * Affluence * Technology
o Hold technology constant for a moment
• Global population’s current increase rate is 1.2% per year
• If we assume affluence (economic prosperity) also
increases at 1.2% per year
• Then in 50 years:
o P = 1.012^50 = 1.82
o A = 1.012^50 = 1.82
o I = 1.82^2= 3.31
o That’s 3.31 TIMES the current obviously problematic impact. IN
YOUR LIFETIME.
54
The Role of Business
•
•
•
•
•
•
Contributes to many ills
Externalities (privatized gain, socialized loss)
Has resources & expertise to help
Sustainability pays for itself (Orlitzky et al.)
Good financial move, especially LT
Fiscal sense
o Risk/uncertainty reduction
o Prevention vs. cure
• Sustainability as 21st century’s great economic opportunity?
vs.
What it means for the candidates on the Republican
side, is if you ... buy into green energy or you play
footsie on this issue, you do so at your political peril.
... And that's our influence. Groups like Americans
for Prosperity have done it.”
Tim Phillips, Americans for Prosperity President
55
Population clock?
56
Back to Savitz
The Role of Business brings us back to Savitz’ book
Chapters 2-5 highlights
57
Savitz: The Age of Sustainability
Factors (beyond physical/natural environment):
Stakeholder Proximity & Influence
Note: I think some of these from ch3 are nearredundant so I’m re-organizing them:
Empowerment:
Freedom & democracy empowers individuals who begin to
question status quo
Empowered employees, customers, investors who question
Activism/empowered stakeholders & “voting with feet”
Networked world:
More news gets out, and more quickly
Activists form/build networks more effectively/efficiently
Interdependence:
Socially conscious world:
More concern over stakeholders, justice, environment, etc.
Corporate power , governmental power
In many cases, firms are the only entity with the power and
skills to do anything
An imperiled world (the focus tonight)
58
Savitz: Corporate Accountability in the Age of Sustainability
1950s:
Make money
Provide Philanthropy
1970s:
Make money
Provide Philanthropy
Protect environment
Safeguard products
2010s:
Make money
Provide Philanthropy
Protect environment
Safeguard products
Promote diversity
Improve communities
Protect workers
Prevent child labor
Foster public health
Ensure human rights
Alleviate poverty
Provide technology
Protect privacy
Oppose corrupt regimes
Patrol supply chain
Engage stakeholders
Measure & report
Continuously improve
59
Step 1: The Sustainable Sweet Spot
• As Savitz states, sustainability is hard, but
o Savitz also states its easy (sweet spot)
o Step 1:
• Identify the “low hanging fruit” or “heavy half” (80/20) solution
• Ask, where are the ‘no-brainer’ opportunities for sustainability?
• Which societal interests are easily and demonstrably justified as serving
business’ interests?
Business
Interests
Sweet
Spot
Societal
Interests
Sweet Spot:
License to Operate
Efficiency Gains
Business Growth
Innovation
Inspiration
60
Savitz: Business’ Response
• Resistance
o Oppositional cultures
• Oppositional framework: Identity based, siege mentality, all those who oppose us MUST be wrong about
EVERYTHING
o Short term profit pressures
• Only the sweetest of sweet spots immune
o Unwillingness of customers to pay
• 2 criticisms of Savitz:
o Untrue, customers will pay a SMALL premium on average
o Customers are not a unitary “they”. Some will pay no premium, some will pay small, some will pay significant.
o Cynical response (greenwashing)
61
Savitz: Cynics (left wing)
• Corporate claims are hype/greenwashing, or efforts to fend off government.
• Business can’t self-regulate, problems already too serious to entrust to business, etc.
o Response: Such criticisms are not entirely false but largely overstated (and defeatist)
• Business is making some progress
o Progress could be faster, of course
62
Savitz: Skeptics (right wing)
• Profitability, not responsibility, is business’ business
o Response: Even most believers only selectively believe that
• (ask a free marketer whether they’d buy from a firm that employed 10-year-old girls working under
deplorable conditions, e.g.)
o Profit maximization is NOT a LEGAL obligation
o Sustainability is more than responsibility, it is also opportunity
o Evidence is that responsibility and sustainability help long-term profits
• These issues fall under government’s purview
o Business may be better equipped
• Don’t free markets fully cost products
o No, they just don’t. Examples: cigarettes, gasoline.
• Fad leading to impoverishment in developing world?
o This has been a question in many RSJ news groups (e.g., should we just stop doing business
with international sweatshops)
• If world adopted American-style resource consumption ≈ 30B souls
• Enlightened self-interest is the way to go
o People are not rational (behavioral business theory demonstrates this)
o Adam Smith, Theory of Moral Sentiments
• The wise (enlightened) man sacrifices self-interest for common good
• Sustainability is rigid ideology
o We can’t even agree on how to define/operationalize it yet!
o Goal is not merely to save souls but to move towards a better world and help business do
this for mutual benefit
63
Videos & Reference
• Business case: Willard
o http://www.youtube.com/watch?v=TWOVY1Q_otA
• Business logic (argument for)
o https://www.ted.com/talks/ray_anderson_on_the_business_logic_of_sustainability
• Sustainability lecture
o http://www.youtube.com/watch?v=2s4NXcfkmPI
• Roberts on AGW impact
o https://www.youtube.com/watch?v=A7ktYbVwr90
• Other materials
o http://climate.nasa.gov/evidence/
o https://www.ncdc.noaa.gov/monitoring-references/faq/global-warming.php
• Corporations and global warming
o http://www.usnews.com/news/blogs/at-the-edge/2014/08/05/wal-mart-ibm-and-coke-among-companiesaddressing-climate-change
64
MGT 501
Responsibility, Sustainability,
Justice
6. Ethics: The Business Case
or
Ethics Pays, and how
Dr. Robert C. Giambatista, PhD
1
Basis of Business Case
• Meta-analyses & literature reviews
o Study of studies asking “does ethics pay” directly
• We’ll look at Orlitsky et al in a few weeks in a related study
• OB/HR research: Previous “Best Practices” module
o Solid HR/Leadership practices are BOTH good business and good
ethics
• Improve both individual (employee) and organizational performance
• Consideration of “residual benefits”
o Logic: We know ethics provides intangible and hard-to-quantify
benefits that have at least SOME economic value
o Thus: If research found that ethics did NOT relate to performance at
all, then it still probably has a hard-to-detect, small positive effect
o PLUS: It’s doing right at no net cost
2
General Model
“Good” management, HR,
leadership practice
Theme of Module 5:
Best Practices
Good
Business
Ethics
Mainstream OB/HR
research findings
Business Processes
&
Intermediate Outcomes
Economic
Performance
Stakeholder Satisfaction
& Motivation, esp.
Three italicized processes are really indisputable. HR management is based on principles of
fairness & justice (also correlated to performance). Finally, literature on trust, reciprocity,
3
fairness also proves out. All based on proven empirical research in management.
Revealed
Ethics: RE
Berrone et al.
Stakeholder
Satisfaction:
SS
Financial
Performance: FP
Applied
Ethics: AE
• Revealed Ethics: Public statements about ethics, e.g., codes – “talk”
• Applied ethics: Actual conduct and practice regarding ethics – “walk”
• Findings:
o RE correlates to FP but those who had ONLY RE and not BOTH RE & AE did not show FP gains
o AE increases SS which increases FP, AE acts through SS (“mediation”)
o Also, RE & AE work jointly to increase FP
• Translation:
o Talk without walk = no FP gain
o FP gains hinge on SS, which is especially facilitated by AE
4
Margolis et al.
• Does ethics pay? Yes!
o Social trends, expectations
o Situations that demand response
• Evidence
o Abundant case evidence – doing right paid off, doing wrong did
not
• Not the same, however, as statistical evidence
• “Boxscore” Literature Review of 80 studies
o Social performance → Financial Performance
• 43 (53%) yes, 19 (24%) none identified, 3 (4%) negative, 15 (19%) mixed.
• In other words 77 of 80, at minimum, found no overall HARM
o To skeptics: would ANYONE claim that if ethics DOESN’T hurt the
bottom line, we SHOULDN’T be ethical?
• Goodwill, stakeholders, happier workers, “intangible”
benefits to all
• Obviously, the above find their way to the bottom line
indirectly
6
How Exhibit 2 should look
Prescription: Behave ethically
Prescription:
Not worth it
1
95
Red: Study showed negative relationship; ethics bad for business.
Yellow: Study showed mixed relationship; ethics good for business because some
good occurs and positive and negative financial effects tend to offset. See note for
caveat
Clear: Study showed no relationship; ethics good business because some good
occurs with no net financial harm.
Green: Study showed positive relationship; ethics good.
Caveat: Should confirm by comparing your firm’s mission & strategy to
the different source studies’ assumptions and design decisions
7
Margolis continued
• Financial Performance → Social Performance
o Not as important, but if you believe they should mutually reinforce each
other it matters
• Similar findings (19 studies, 13 +, 3 no, 3 mixed, 0 negative)
• Higher FP means more resources
o Good to know though that higher FP are not stingy
• KLD index
http://www.msci.com/products/indices/esg/methodology.html
•
http://www.msci.com/resources/factsheets/MSCI_ESG_IVA.pdf
o We may come back to this, closely related to 3BL
o Evaluates company performance on:
• Community, diversity, employee relations, natural environment, product safety and
quality
• Different measures:
o KLD, Fortune Most Admired
o “Certainly, some scholars applaud the multiple methods, measures, and data
sources that have been utilized in assessing corporate social performance.
This variety is seen as capturing the diversity of corporate practices that
constitute social performance. Critics see it in the opposite way, as an
indication that corporate social performance is an incoherent jumble of
practices.”
o Which set of scholarly arguments do you agree with? Hint: Exhibits 3 & 4.
8
Margolis conclusions
• 1: Social (ethical) performance → financial performance
• 2: Evaluating ethical performance solely on financial performance ignores
other benefits and beneficiaries
o Including employee morale, benefits to community & society, innovation,
reputation
o NO effect to FP is a POSITIVE effect for the world (do good, create no
financial harm = net positive)
• 3: Issue is resolved; now it’s “how can mangers be equipped to meet
rising expectations?”
o 1. What are our organization’s objectives, duties and concerns? In other
words, what do we stand for and want to accomplish?
o 2. How is our organization best able to accomplish its ethical and financial
objectives?
o 3. How should our organization respond and act (toward social/ ethical
issues) when the two sets of objectives are in tension?
9
Why does ethics pay? Macro
perspective
o Goodwill & reputation has economic value, and is probably
undervalued
o Many customers and some investors consider a firm’s ethical
reputation in choice-making
• Thought experiment: What proportion of customers SHY AWAY from shady firms? What
proportion are ATTRACTED to such firms?
o Ethical firms benefit from better relationships inside and outside
business
• Customer/stakeholder acquisition & retention
o Risk avoidance:
• Poor ethics increases risk of insolvency if exposed
• Ditto major lawsuits and fines
o These can have snowball effects on future business
• Which is probably a bigger problem than suits, fines themselves
(scarlet letter)
• http://money.cnn.com/2018/03/19/news/companies/united-airlines-oscarmunoz/index.html
10
Why does ethics pay? Micro
Perspective
o Micro = inside firm, OB/HR emphasis
o Ethics builds trust, which is efficient and effective
o Builds loyalty and commitment
•
•
•
•
Motivation and performance of workers
Reduced turnover
Increased organizational citizenship behaviors
All of above highly correlated to desirable outcomes
o Employee job satisfaction
• Correlated to motivation, performance, behavior, and health
o Ethics as one indicator of “good management” generally
• Good management increases ethics, and vice versa
o Ethical practices/leadership also increase:
GM
• Employee empowerment, creativity, innovation, etc.
o All of which have been correlated to performance
o Still skeptical?
• I could provide you a list of 500+ OB/HR articles to read by next week
E
FP
11
Over time, who likely leaves/stays?
• Assume 2 dimensions, 2 types per dimension, of employees
o Marketable (M) and Unmarketable (UM)
o Ethical (E) and Unethical (UE)
• Assume 2 types of firms, ethical/responsible and not, over two time periods
• Q: What does T2 look like for each?
T1: All firms
M
T2: Ethical Firms
T2: Unethical Firms
M
UE
E
E
UM
UM
UM
M
UE
UE
E
12
Improving Personal &
Group Performance
Ethically
Summation of concepts to date
13
Reflections on Dilemmas
• Always consider 3rd ways out
o Dilemma is a bad word, and only an uncreative mind can’t perceive
other possibilities
• Time, process, and colleagues are your allies – keep the game alive.
• Big learning for me:
o Look outside dilemma to organizational and related causes, structural,
policy, culture, etc.
• Even as trapped in a current dilemma, strategize to change the firm, find allies.
o If current “dilemma” can’t be avoided, change the conditions that
make such dilemmas inevitable.
14
Reflections on Psy/Soc module
• How to manage these factors that enable unethical behavior
o Awareness is a good first step
• Name the processes that might be going on, but do it with dignity
o
o
o
o
Participative, servant, and ethical leadership
Psychological safety in teams
Reward systems that reward/don’t punish ethics
Avoid direct confrontation
• Ex: If someone is in denial or resisting, don’t call him/her out but discuss the
issue and the stress involved with it. Give them a legit way out.
o Group tricks: break the spell
• Tips to prevent groupthink
o Also avoid the causes
• Conformity / Obedience (Milgram/Asch)
o Search for 1 person who agrees with you
o Communicate outside face-to-face environments
o Question authority, even if you can’t verbalize the question
15
Individual tools
• Other-centeredness, empathy, perspective-taking, and
collaboration (win-win) as strategy and habit
o All classic OB concepts that fit Golden Rule
• Learn more about cognitive & perceptual biases and think
about how they might affect you
• Proactively search for disconfirming information and
weight it evenly
• Re-frame, re-word dilemma, see if perception changes
• Read literature on defense mechanisms, move to more
mature mechanisms
• Keep antennae up for justifications/hazard signs
• Find ways to manage stressfulness of situations
o Buy time, extend process, find allies
16
Reflections on Frameworks module
• The quick tests (borrowed from 505) can be helpful for smaller
problems
o Also can be extra criteria in addition to utilitarianism and deontology in
full model
• Remember the main framework is intended to be complete:
o
o
o
o
Stakeholder analysis
Rational problem solving
Emphasis on creative solutions
Pre-eminence of universal principles as decision criteria
• Can use Collins, Kohlberg, Byron, even quick test
o Iteration and “closing the loop” until solution is identified
• Try the app as well: Ethical Decision Making
17
Ethical Navigation: Conclusion
• To what extent is corporate policy, structure, culture, and politics
contributing to this situation?
o Who are some powerful people with principles here?
o How can I turn the above into allies? (Politics are fickle, policy is
malleable, and large firms often have sub- and even counter-cultures)
•
•
•
•
How can I use time and process to my advantage?
How can I avoid binary thinking?
How can I make a difference without martyring myself?
How can I find and argue for evidence of:
o + consequences of doing right
o - consequences of doing wrong
• Can I think of stakeholders who might be helped, or whose interests will
help brainstorming?
• Remember “Small Wins” from 505
o Making the/your world a bit better every time
• Always ground choices in ethical principles
18
MGT 501
Responsibility, Sustainability,
Justice
6. Ethics: The Business Case
or
Ethics Pays, and how
Dr. Robert C. Giambatista, PhD
1
Orlitzky
• This is a major, complex academic research piece
• Be honest:
o Tell me what you were confused about, what didn’t make sense
• We’ll talk about it, I’ll help interpret the article
o Give me your general impressions about the article
• What did you think the article’s thesis was?
• What do you think about the article’s thesis and evidence for it?
• Other/general thoughts?
Business Case for CSR
•
The articles we reviewed for Ethics Business Case typically
operationalize Ethics as CSR, so the same arguments and findings
apply here.
• Orlitzky et al. primer:
o Mediating effect x→y→z
• Y mediates (comes between) x & z in a causal chain of events
o Example: Ethical leadership → stakeholder orientation → innovation
o Bidirectional causality x Y
• We might call this a virtuous (or vicious) cycle
o Example: CSR → organizational performance → resources for more CSR
initiatives
o Moderating effect
• A relationship between x & y varies as a function of M.
o Example: Industry type might moderate the relationship between CSR and
effectiveness.
o Don’t worry about H4 (methodology-focused)
• Requires doctoral education in research methodology
o 52 studies. 388 findings. 33,878 observations.
• Each observation is a firm, probably for a financial year
Orlitzky: Main arguments
• Definitions
o CSP = Corporate Social Performance (how well does firm embody/practice
CSR, ethics, environment, etc.)
o CFP=Corporate Financial Performance
• H1: CSP→CFP (Similar to Berrone): Social performance
(responsible firms) satisfy stakeholders, which is instrumental to
financial performance
•
•
o
Good stakeholder management increases effective adaptation to external
demands.
Responsible firms develop fair, rational ways of assessing stakeholder
claims (including investors)
Aka ‘Good management’ theory
• H2: CFP→CSP Healthy firms have slack resources to expend on
CSP
•
Note “virtuous cycle”
Orlitzky: H3 & H4
1. H3: Mediators (X→M→Y)
a)
b)
CSP→competencies, knowledge (see above)→CFP
CSP→reputation→CFP
2. H4: Moderators (X→Y depends on Z)
•
CSP→CFP is robust across wide array of how CSP and CFP are measured
across studies
•
•
In other words, you will find the positive relationship no matter how you study it!!!
4 CSP measures:
•
•
•
•
•
Disclosure (annual reports, letters to shareholders, etc.)
Reputation (3rd party reputational ratings of social performance)
Social audits (3rd party analyses of behaviors/programs)
Values & Attitudes (surveys of corporate culture relevant to CSR)
3 CFP measures:
•
•
•
Market based (financial/investment)
Accounting based (internal efficiency, e.g.)
Perceptual (survey measures)
Orlitzky et al.
CSP
• Measurement strategy
CFP
13% shared
variance
o A moderator, also a strength of this study and CSR literature
• If findings are robust across strategies, strengthens argument
• Findings (mean true scores)
o CSP & CFP r = .36 (.36482=.13, n=388 findings spanning 33,878
observations1)
• Moderate positive effect
o CEP & CFP r = .12 (.12462=.02, n=139 findings spanning 9,823
observations)
• Small positive effect
o File drawer analysis
• Non-findings often don’t find their way to publication, unknown how many of these
there could be.
• This tells us how many there would have to be in order to jeopardize the primary
findings
o If the number is 10 or 20, it’s a problem. It’s 1037. No problem; not remotely
plausible.
Orlitzky cont’d
• Virtuous cycle (H2)
o Findings similar whether CSP→CFP or CFP→CSP studied, supporting
the cycle concept
• Learning/Competencies (H3a) and Reputation (H3b)
o Both supported, r=.33 and r=.49, respectively
• A. CSR → managerial competencies → organizational performance, AND:
• B. CSR → reputation → organizational performance
• Measurement strategy (H4)
o Findings do vary as a function of how CSP, CFP are measured
• BUT, the findings are robustly positive, which STRENGTHENS the CSP→CFP
argument (no matter how CFP is measured, it’s a positive relationship)
More on H4
• Strongest, if most abstract, point of study.
o Anyone critiquing “bias” is (knowingly or not) saying the
METHODS are biased. H4 PROVES this not to be true:
o Lowest method is disclosure, but that’s just empty reporting and
isn’t backed up by action.
• Rebuts cynics regardless – investors don’t respond (much) to mere
disclosure/statements (accountants are harder to fool than investors?)
o Toughest measures are audit and culture/acctg, all measures
positive (green numbers).
o If anything, investors undervalue true relationship (compare the 2
blue numbers to each other)
CFP CSP➔
Overall
Disclosure
Reputation
Audit
Culture
Overall
.36
.09
.73
.18
.21
Market
.15
.11
.71
.04
No data
Acctg
.42
-.02
.61
.26
.15
Percept
.89
No data
.95
.15
.59
Orlitzky conclusions
• Rejects the Friedman (anti-CSR) argument #1
• Friedman and libertarians may be right in that:
o CSP implies Government regulation may not be necessary
• Q: Does it appear to you that businesses sufficiently self-regulate with
respect to environment, marketing, labor, etc.?
o Effective management can and should increase CSP to increase
CFP proactively
• One problem is getting individuals to believe the finding
o Go back to mod 4: Denialism, Dissonance, Resistance to change, etc.
o Finding is not really subject to “That’s their opinion”, etc.
• Future recommendations; managerial implications
o
o
o
o
o
o
Focus on social and environmental outcomes
Refine concept of stakeholder
Market forces do NOT punish CSP
Use CSP as a reputational lever
Integrate market and non-market strategies
Use CSP unilaterally to reduce gov’t regulation
Summation
-1
0
.36
Negative relationship
CSP → - CFP
No
relationship1
Positive relationship
CSP → +CFP
Do not solve social problems (and
let society crumble?) or solve
through other means and
institutions (assumes a wellfunctioning government)
Engage in
CSP –
benefits and
costs offset,
no Fin harm
and some Soc
good
Engage in CSP – it helps the
bottom line.
1
Note on file drawer problem, 0 and negative relationships
+1
Examples of Best Practice
This is not an exhaustive set, just enough to provide a flavor
11
GRI: Background
• UN, NGOs initiative
• Framework for developing & reporting metrics
• Allows for
o
o
o
o
o
Accountability, visibility
Continuous improvement
Competitive advantage
Common understanding of metrics
Legitimization of CSR practice domains
• Firms still have to determine strategies & initiatives
o GRI is more of a scorekeeping tool
12
GRI Preview: Snapshot of coverage
13
Labor Practices and Decent Work
• SAS Institute: on-site day care, 35 hour work weeks, rec center, life
counseling services, summer camp for kids, on-site cafeteria/café.
Unlimited sick days.
o Turnover rate is 3-5% vs. 20-25% in software industry
• Training and Development (source: udemy.com)
o Getty Images: WeLearn Wednesdays - sharing recommended online courses
through internal social media platform.
o ITX: individual development plans for employees with online courses,
communication channels to share which courses/instructors they recommend
o Prosper: Creating a culture of learning, extending to personal development
• Diversity – various examples
o https://www.aperianglobal.com/leaders-diversity-inclusion-5-lessons-top-globalcompanies/
• Supplier assessment
o Following the Foxconn fiasco, Apple amped up its engagement with suppliers,
supplier standards documentation, audit visits, etc.
14
Human Rights
• Starbucks is well-known for supporting farmers and ethical
sourcing
o https://www.starbucks.com/responsibility/community/farmer-support
• Mars has committed to eradication of child/forced labor, a
huge problem in the cocoa industry
o https://www.washingtonpost.com/graphics/2019/business/hersheynestle-mars-chocolate-child-labor-west-africa/
15
Society
• Local communities
o Pepsi – see Kerala example in Savitz text.
• Anti-corruption
o JCM Capital refusing to “play the game”
• https://www.tradecommissioner.gc.ca/canadexport/0000706.aspx?lang=eng
• Public policy
o Some companies increase climate action even as government policies regress
(c. 2019)
• https://www.washingtonpost.com/climate-environment/2019/09/24/some-corporations-step-upclimate-action-government-policies-stall/
o Others urged US government to stay in Paris Agreement
• https://www.c2es.org/press-release/major-companies-urge-white-house-to-stay-in-paris-agreement/
16
Product Responsibility
• Customer Health & Safety
o J&J and the Tylenol crisis (see Wikipedia for details)
• Marketing Communication
o Everlane & “radical transparency”
• https://www.wordstream.com/blog/ws/2017/09/20/ethical-marketing
o This website has other examples of ethical marketing
• And, yes, being responsible pays:
o https://www.foodqualityandsafety.com/article/15244/
17
Details on 3BL/GRI metrics
These go into great detail regarding key definitions
They should help you visualize some of the issues, concerns intended by the standards
Use these slides as a reference and to brainstorm some potential issues, concerns,
strategies, etc.
It is not necessary to ”study” these slides as if there was a test on them, they are just
a reference to help spur creativity and application.
18
GRI Preview: Snapshot of coverage
19
General format of detailed slides
• Elaboration of selected specific metrics
• Comment on the metric
• Examples of issues/concerns that metric tracking helps inform
20
Sub-Category I: Labor Practices &
Decent Work
• Aspects
o
o
o
o
o
o
o
o
Employment
Labor/Management Relations
Occupational Health and Safety
Training & Education
Diversity and Equal Opportunity
Equal Remuneration for Women & Men
Supplier assessment for Labor Practices
Labor Practices Grievance Mechanisms
21
Employment
• Total number and rates of new employee hires and employee
turnover by age group, gender, and region
o Note the biodata breakdowns. Hiring & turnover have their own
implications (high turnover indicates management problems, e.g.) but
differential rates for these also point to fairness issues
• Benefits provided to full-time employees that are not provided
to temp or part-timers, by locations
o The GRI is mainly concerned with how well full-time employees are
treated
• However, it can also indicate if a firm is particularly exploitative regarding other
workers
o Example: A firm cuts back on FT employees in favor of PTs so it doesn’t have to
provide health benefits
• Return to work and retention rates after parental leave, by
gender
o Are firms providing fair opportunities to women after their leave?
o Are firms providing any opportunities for men to take leave?
22
Labor/Management Relations
• Minimum notice periods regarding operational changes,
including whether they are specified in collective agreements
o How much advance notice: so employees can consider other
opportunities fairly
o What consultative & negotiation practices exist to empower workers
when changes are going to occur
23
Occupational Health & Safety (OHS)
• Percentage of total workforce represented in formal
health/safety committees that monitor/advise OHS
o What level of involvement/commitment/engagement exists
• Injury types/rates, disease, lost days, fatalities, absenteeism
overall, by region and gender
o These provide base data that reflect good/bad practice
• Workers with high incidence or high risk of diseases related to
their occupation
o These help identify occupations that need attention/modification
• OHS in formal agreements with unions
o Degree of specification, formalization of OHS practice, equipment,
training, monitoring, rights, etc.
24
Training & Education
• Average hours of training per year per employee by gender
and employee category
o Level of commitment to developing employees, fairness for
men/women, and different types of workers
• Programs for skills management and lifelong learning that
support the continued employability of employees and assist
them in managing career endings
o Beyond training – which is usually specific, technical skills, what is the
firm doing to help people become better professionals and grow, and
also deal with the future/retirement?
• Percentage of employees receiving regular performance and
career development reviews, by gender and employee
category
o Is the firm providing sufficient/appropriate feedback and is this robust
for men/women/job types?
25
Diversity & Equal Opportunity
• Composition of governance bodies and breakdown of
employees per employee category according to gender, age
group, minority group membership, other diversity indicators
o What sort of governance/oversight is formalized into the
organizational structure regarding diversity?
o Are there patterns of employment across various diversity factors that
reflect potential problems/discrimination?
26
Equal Remuneration for Women & Men
• Ratio of basic salary and remuneration of women to men by
employee category, by significant locations of operation
o Are there any indicators of wage discrimination by job type and
location?
o Remuneration is synonymous with overall compensation (includes
benefits, etc.)
27
Supplier Assessment for Labor
Practices
• Percentage of new suppliers that were screened using labor
practices criteria
o Was due diligence followed in assessing the suppliers’ labor practices
for things like:
• Employment practices, health/safety, discrimination/harassment, industrial
relations, wages/compensation, working hours
• Significant actual/potential negative impacts for labor
practices in the supply chain
o This one is a bit more abstract, goal is to communicate awareness of
real or potential problems and to assess vs. expectations
28
Labor Practices Grievance Mechanisms
• Number of grievances about labor practices filed, addressed,
and resolved through formal mechanisms
o Provides accountability regarding the integrity and legitimacy of
grievance processes
29
Sub-Category II: Human Rights
•
•
•
•
•
•
•
•
•
•
Investment
Non-discrimination
Freedom of Association & Collective Bargaining
Child Labor
Forced or Compulsory Labor
Security Practices
Indigenous Rights
Assessment
Supplier Human Rights Assessment
Human Rights Grievance Mechanisms
30
Investment
• Total number/% of significant investment agreements and
contracts that include human rights clauses or that underwent
human rights screening
o How well are human rights considerations integrated into a firm’s
economic decisions?
• Total hours of employee training on human rights policies or
procedures concerning aspects of human rights that are
relevant to operations, including the percentage of employees
trained
o How thoroughly are such policies/procedures integrated into the firm’s
practice evidenced through training?
31
Non-discrimination
• Total number of incidents of discrimination and corrective
actions taken
o Report number and status/actions
• Review process, remediations made, incidents resolved
32
Freedom of Association and
Collective Bargaining
• Operations and suppliers identified in which the right to
exercise freedom of association and collective bargaining may
be violated or at significant risk, and measures taken to
support these rights
o Goal is to reveal actions firms have taken to reveal whether
opportunities exist for workers to exercise their rights to freedom of
association and collective bargaining, and across its range of
operations.
33
Child Labor
• Operations and suppliers identified as having significant risk
for incidents of child labor, and measures taken to contribute
to the effective abolition of child labor
o Also covers young workers exposed to hazardous work
o Goal is to make this transparent to incentivize abolition of child labor
generally
34
Forced or Compulsory Labor
• Operations and suppliers identified as having significant risk
for incidents of forced or compulsory labor, and measures to
contribute to the elimination of all forms of forced or
compulsory labor
o Similar to child labor in its intent – make this transparent to move the
practice to its abolition
o Also focuses on types of operations and suppliers, as well as
geographic areas that might be at risk
35
Security Practices
• Percentage of security personnel trained in the organization’s
human rights policies or procedures that are relevant to
operations
o Goal here seems to be to ensure human use (or non-use) of excessive
force by security personnel
36
Indigenous Rights
• Total number of incidents of violations involving rights of
indigenous peoples and actions taken
o Reporting includes the incident, how remediated/resolved, etc.
o Goal is to protect indigenous rights by making such incidents and
process transparent
37
Assessment
• Total number and percentage of operations that have been
subject to human rights reviews or impact assessments
o How extensive is the firm’s processing of human rights considerations,
how is it integrated into firm’s management processes, etc.
38
Supplier Human Rights Assessment
• Percentage of new suppliers that were screened using human
rights criteria
o Points to the rigor used for supplier screening in this area
• Significant actual and potential negative human rights impacts
in the supply chain and actions taken
o Informs stakeholders about an organization’s awareness of significant
actual and potential negative human rights impacts in the supply
chain.
39
Human Rights Grievance Mechanisms
• Number of grievances about human rights impacts filed,
addressed, and resolved through formal grievance
mechanisms
o Gives evidence to the seriousness, legitimacy, integrity, etc. of both
human rights and how grievances arising from these are effectively
managed
40
Sub-Category III: Society
•
•
•
•
•
•
•
Local Communities
Anti-corruption
Public Policy
Anti-competitive behavior
Compliance
Supplier Assessment for Impacts on Society
Grievance Mechanisms for Impacts on Society
41
Local Communities
• Percentage of operations with implemented local community
engagement, impact assessments, and development
programs
o Thorough reporting of local engagement efforts & programs and their
assessment
• Operations with significant actual or potential negative
impacts on local communities
o Informs stakeholders of an organization’s awareness of its impacts on
local communities
42
Anti-Corruption
• Total number and percentage of operations assessed for risks
related to corruption and the significant risks identified
o How extensive is the firm’s risk assessment, awareness of possible
exposure risks?
• Communication and training on anti-corruption policies and
procedures
o What is the firm doing to educate its strategy for preventing
corruption?
• Confirmed incidents of corruption and actions taken
o Did the firm experience corruption and what did it do about it?
43
Public Policy
• Total value of political contributions by country and
recipient/beneficiary
o Hopefully this one speaks for itself – the key again is transparency,
thus making the firm accountable to stakeholders
44
Anti-competitive behavior
• Total number of legal actions for anti-competitive behavior,
anti-trust, and monopoly practices and their outcomes
o Again, somewhat self-explanatory, is the firm being charged such
conduct and what happened as a result?
45
Compliance
• Monetary value of significant fines and total number of nonmonetary sanctions for non-compliance with laws and
regulations
o Provides one datum for all such fines, etc.
46
Supplier Assessment for Impacts on Society
• Percentage of new suppliers that were screened using criteria
for impacts on society
o Encourages the firm to develop a screening process that considers
social impact/responsibility of suppliers, and to implement it
consistently
• Significant actual and potential negative impacts on society in
the supply chain and actions taken
o What damage hath our suppliers wrought and what have we done
about it?
o The “potential” piece makes transparent efforts to identify & prevent
future impacts
47
Grievance Mechanisms for Impacts on
Society
• Number of grievances about impacts on society filed,
addressed, and resolved through formal grievance
mechanisms
o What processes do we have in place for managing grievances? What
are the outcomes?
o How many grievances are there?
48
Sub-Category IV: Product
Responsibility
•
•
•
•
•
Customer Health & Safety
Product and Service Labeling
Marketing Communications
Customer Privacy
Compliance
49
Customer Health and Safety
• Percentage of significant product and service categories for
which health and safety impacts are assessed for
improvement
o Scope of efforts to manage and assess health and safety impacts
• Total number of incidents of non-compliance with regulations
and voluntary codes concerning the health and safety impacts
of products and services during their life cycle, by type of
outcomes
o Outcomes could be fines/penalties, warnings, or simply deviance from
voluntary codes
o Somewhat self-evident what this is getting at
50
Product/Service Labeling
• Type of product and service information required by the
organization’s procedures for product and service information
and labeling, and percentage of significant product and
service categories subject to such information requirements
o How extensive are internal requirements on labeling?
• Total number of incidents of non-compliance with regulations
and voluntary codes concerning product and service
information and labeling, by type of outcomes
o Are we in compliance with the law as well as our own standards?
• Results of surveys measuring customer satisfaction
o For the whole organization, major product/service categories, and at
major locations of operation
51
Marketing Communications
• Sale of banned or disputed products
o Also reports organizational responses to these
o Disputed means there are stakeholder questions/debate
• Total number of incidents of non-compliance with regulations
and voluntary codes concerning marketing communications,
including advertising, promotion, and sponsorship, by type of
outcomes
o Hopefully by now you’re seeing patterns, several measures across the
3BL deal with number of non-compliance incidents and how they are
resolved
52
Customer Privacy
• Total number of substantiated complaints regarding breaches
of customer privacy and losses of customer data
o Non- compliance indicates either inadequate internal management
systems and procedures or ineffective implementation regarding
customer privacy.
53
Compliance
• Monetary value of significant fines for non-compliance with
laws and regulations concerning the provision and use of
products and services
54
MGT 501
Responsibility, Sustainability,
Justice
5. Ethics: Best Practices
or
Ethical Leadership of Human Resources
Dr. Robert C. Giambatista, PhD
1
Where we are in semester
• To this point, we have
mainly focused on
individual actors and what
they can/should do to be
ethical
• Shift now, decisively, to
organizational level
o Will fan out from internal to
external stakeholders
[6-12]
Organizational Level:
External Stakeholders
CSR & Sustainability
[5-6] Organizational Level:
Internal Stakeholders
HR Practices
Ethical Leadership
[1-4] Personal,
Individual Level
4
The Virtuous Cycle
• “Good Management” Hypothesis
o Principles of leadership and
management of human resources
tend to be ethical
• Example: MGT 505 chapter on leadership =
“Leading Positive Change”
• Example: MGT 505 chapter = “Empowerment
& Delegation”
o Ethical leaders and managers seek to
be good managers (to do things the
right way)
o Good leaders and managers seek to
follow principles and be ethical
Ethical
Mgmt.
Good
Mgmt.
6
Best Practices
• Codes of Ethics & Conduct
• Human Resources/Strategy/Leadership perspective
o
o
o
o
Ethics in Recruiting & Selection
Ethics in Training & Development
Ethics in Performance Assessment
Empowering Ethical Employees
• Promoting Ethical Leadership
o And employee-friendly practices
• Ethical Reporting
• Diversity Management
• Q: What, in your opinion, are the characteristics of an ethical
leader?
7
Codes of Ethics/Conduct
8
What is a code of ethics/conduct?
• Investopedia
o A code of ethics is a guide of principles designed to help professionals
conduct business honestly and with integrity. A code of ethics document
may outline the mission and values of the business or organization, how
professionals are supposed to approach problems, the ethical principles
based on the organization's core values and the standards to which the
professional will be held.
• Wikipedia
o Ethical codes are adopted by organizations to assist members in
understanding the difference between 'right' and 'wrong' and in applying
that understanding to their decisions.
o Comparison vis-à-vis code of conduct:
• A code of ethics will start by setting out the values that underpin the code and will
describe a company's obligation to its stakeholders. The code is publicly available and
addressed to anyone with an interest in the company's activities and the way it does
business. It will include details of how the company plans to implement its values and
vision, as well as guidance to staff on ethical standards and how to achieve them.
• A code of conduct is generally addressed to and intended for employees alone. It
usually sets out restrictions on behavior, and will be far more compliance or rules
focused than value or principle focused.
9
Johnson & Johnson: Lessons
• Johnson & Johnson credo
o https://www.jnj.com/sites/default/files/pdf/jnj_ourcredo_english_us_8.5x
11_cmyk.pdf
• Would argue that this closely predicted, enabled excellent Tylenol response in
1982
• Credo training
o http://www.investor.jnj.com/2009sustainabilityreport/overview/transpare
nt.html
• Short videos
o https://www.youtube.com/watch?v=knO6JjJXV6g
o https://www.youtube.com/watch?v=GiqbJOrTwmo
10
McCraw and Codes
• NYSE: Codes of Ethics should cover:
• • Conflicts of interest;
• Corporate opportunities;
• Confidentiality;
• Fair dealing;
• Protection and proper use of company assets;
• Compliance with laws, rules, and regulations (including insider
trading laws); and
• Encouraging the reporting of any illegal or unet...
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